In 2020 I fully bought and sold an ETN (Section 1256 60/40 treatment eligible security) and made a $15K gain then received 1099B and Schedule K-1. 1099B correctly shows the $15K as short term gains. Schedule K-1 shows a loss of $70K and provides instructions for trade-by-trade 1099B basis adjustments so that the 1099B shows an extra gain of $70K. I entered the 1099B and Schedule K-1 in TurboTax Premier; TT correctly split the Schedule K-1 loss of $70K (60/40 ) as $42K long term loss and $28K short term loss. But, when I manually adjust the basis of each trade on 1099B, TT considers the total adjusted gains ($85K =$15K true gain+ $70K adjustments) as short term only (as TT doesn't know about the 60/40 rule on the 1099B side).
This creates a LT/ST gains vs losses matching problem and results in higher taxes (i.e. not enough ST losses to fully offset the ST gains). What is the correct way to adjust the 1099B basis to apply the 60/40 LT/ST rule?
Thanks in advance for your help!
